Canada GDP Up 0.2% in July, Likely Stalled in August; CIBC Says Jobs, CPI Key to October Cut

09:01 AM EDT, 09/26/2025 (MT Newswires) -- The Canadian economy posted its first gain in four months with a 0.2% rise in July GDP before likely stalling in August, CIBC's Andrew Grantham said, leaving Q3 growth tracking 0.8% annualized-just below the BoC's 1.0% projection-and putting upcoming jobs and CPI data in focus for a potential October rate cut.

"The Canadian economy took a slightly bigger than expected step forward in July, only to stumble again in August," said CIBC's Andrew Grantham Friday.

Through the monthly volatility, Grantham noted Q3 GDP is tracking at an 0.8% annualized rate, which is better than where it was tracking before today's release (0 to +0.5%), but still slightly below the Bank of Canada's July MPR projection (+1.0%).

"Because of that we still think that the upcoming employment and CPI releases will be more important in determining whether we get the follow up interest rate cut that we currently forecast at the time of the October meeting," he said.

Grantham noted the 0.2% gain in July GDP was a tick stronger than the advance estimate and the consensus forecast, and the first increase in activity for four months. Growth was seen in just over half of the broad sectors covered (11 of 20), with the largest contributions from mining, oil & gas and manufacturing.

Growth in the latter was driven in part by the auto industry, where fewer seasonal closures were seen this year which positively impacted the seasonally adjusted figures. However, Grantham also noted, this may have reversed in August, with advance industry data already pointing to a decline in overall manufacturing sales that month. "The advance estimate for overall August GDP suggests that the economy stalled again that month," he said.

Through the monthly volatility, Q3 GDP is tracking a 0.8% annualized rate, which is better than where it was tracking before today's release (0 to +0.5%) but still slightly below the Bank of Canada's July MPR projection (+1.0%). Accordingly, upcoming employment and CPI releases will be pivotal in determining whether a follow-up rate cut is delivered at the October meeting, as currently forecast.

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